The University of Sydney Page 1
University of Sydney Business School
IBUS 6020 Enterprise
Management in China
Week 3 Lecture 2
Entrepreneurial networks
The University of Sydney Page 2
From family business networks to entrepreneurial networks
The University of Sydney Page 3
How do business networks outgrow the family firm?
– Are business netwooks able to
o regulate behaviour
o create predictability
o build trust
Do they provide trust based on
o self-interest
o expectation of future gain
o enforcement and sanctions
o credible commitment
o incentives
The University of Sydney Page 4
The sociological perspective: Hybrid Family Firms
Burt, Ronald S, Sonja Opper, and Na Zou. “Social Network and Family Business: Uncovering Hybrid
Family Firms.” Social networks 65 (2021): 141–156. Web.
https://sydney.primo.exlibrisgroup.com/permalink/61USYD_INST/2rsddf/cdi_proquest_journals_2519431856
We use social network analysis to describe what it means for a firm to be embedded in a family.
We uncover “hybrid family firms” that look modern like firms that exclude family, but operate
socially like a family firm.•We find no differences in performance or network advantage for family,
hybrid, and family-excluded firms.
But the look-modern, act-traditional hybrid family firms stand alone in prospering with a CEO
embedded in a closed network. What does it mean for a private enterprise in China to be
embedded in a family? Our purpose here is twofold: (1) use social network analysis to describe
what it means for a firm to be embedded in a family, (2) reveal from the application a new kind of
firm, not family, yet akin to family. Armed with data on a large probability sample of private
enterprises — a third of which meet ownership and employment criteria of being family businesses
— we uncover a category of “hybrid family firms” that look modern in the style of firms that
exclude family, but operate socially in ways similar to family firms.
The University of Sydney Page 5
Economic analysis
– How to interpret the sociological notion of hybrid family firm in economic
terms?
– Is there an economic rationale that work in the same way for traditional
family firms and for hybrid family firms?
–
The University of Sydney Page 6
The institutional view of traditional family networks
Asset
allocation
Organisation
Institutions
Natural
membership
Family institution: central
control over shared assets
Family
assets
Asset 1 Asset 2 Asset 3
The University of Sydney Page 7
The institutional view of (hybrid) business networks
Asset allocation
Organisation
Institutions
Resource-based
membership
Network institution: collective
control over shared assets
Collective
Network
assets
Asset 1 Asset 2 Asset 3
The University of Sydney Page 8
What is similar between the two types of networks?
Resource base
both have a resources endowment
Institutions
both have a set of rules to control assets
Asset management
assets are managed by network members or managers under the control
of network members
Reconfiguration of assets
assets can be combined and reconfigured
Exploration and exploitation of assets
Three forms: 1. Private assets, 2. network assets, 3. network concerns
The University of Sydney Page 9
Asset reconfiguration
The University of Sydney Page 10
Asset reconfiguration
Asset
reconfiguration
Asset formation
Organisation:
Asset
coordination
Network
assets
Asset 1
New
Asset 1
Asset 2 Asset 3
New
Asset 2
The University of Sydney Page 11
Two directions of asset reconfiguration
Exploitation
– The network now brings together five
stakeholders around the warehouse drom
project: their network concern
– The five stakeholders combine their
contribution into a new network asset to
produce warehouse drones.
– The Suzhou Smart Warehouse Drone
Factory Ltd is established with 3 legal
shareholders and operates as a private
asset.
Exploration
– The network decides to close down an
asset (e.g., Wujiang Mini-drone factory.
The legal shareholder rights are
extinguished,
– The remaining assets are controlled by the
network: network assets
– The remaining assets are combined with
new ones for an new project: a network
concern
The University of Sydney Page 12
Networks assets can be reconfigured
Network
Asset
Private
Asset
Network
Concern
Network
Asset
Network
Asset
Network
Asset
Network
Asset
The University of Sydney Page 13
Exploration and Exploitation
Private
Asset
Network
Concern
Private
Asset
Network
Concern
Network
Asset
Network
Asset
Exploratory
PathExploitatory Path
The University of Sydney Page 14
Entrepreneurship and Firm
– Entrepreneurship takes priority over the firm
– The border between owners and managers is fluid
– Beneficiary ownership takes priority over legal ownership
– Stakeholders are more important than shareholders
– Firms are prone to jump industry borders
– Firms have a limited life-span
– Incentives for horizontal conglomeration are stronger than for
vertical integration
The University of Sydney Page 15
Ask your neighbour:
Under what conditions would you
invest in a network firm?
CHAT
Who to trust?
The University of Sydney Page 16
The transformation of personal trust enables
• Business Networks
Enables the formation of private enterprises
Enables formation of new institutions
Enables new modes of business
• Business Ecosystems
Enables formation of platform firms and
Enables digital business ecosystems
Enables transnational cooperation
• Business-Government interaction
Central government SOE co-evolution
Local government POE co-evolution
The University of Sydney Page 17
Website
http://sydney.edu.au/business/mmgt
Twitter
twitter.com/sydney_business
Facebook
facebook.com/University.of.Sydney.Business.School
LinkedIn
Sydney.edu.au/business/linkedin
Thank you!